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1. Good Intentions, Better Outcomes: Shifting the Debate About Social Protection and Informality

Author:
James Heintz and Jayati Ghosh
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The introduction of social protections for individuals engaged in paid employment frequently comes up against arguments that such measures would have an adverse impact on employment, reduce access to formal jobs, and result in greater informality. The argument is that, while well intentioned, such policies distort labor markets and generate significant economic costs that either leave some workers worse off than they would have been in the absence of such protection, or the interventions become a drag on overall economic performance, encumbering the process of development. In what follows we critically evaluate such arguments and provide responses to the claim that social protections lead to higher informality. We also consider the challenges involved in providing social protection to different types of workers, including not only those employed by others but specifically the self-employed and unpaid workers.
Topic:
Economics, Employment, Labor Market, Informal Economy, and Protection
Political Geography:
Global Focus

2. India’s Service Sector: New Areas for Future Cooperation

Author:
Hyoungmin Han
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Given the growing significance of the Indo-Pacific region, the strategic importance of India is on the rise. With its considerable population and economic potential, India offers many opportunities for cooperation in various sectors. However, past cooperation between Korea and India has focused on the manufacturing sector. In order to consolidate economic ties be-tween Korea and India and to access the growing Indian market, cooperation in various industries, including services, is necessary. In this article, we will explore key aspects of India’s service industry and policy implications for better cooperation between two countries.
Topic:
Economics, International Cooperation, Markets, Bilateral Relations, and Manufacturing
Political Geography:
South Asia, India, South Korea, and Indo-Pacific

3. Korea-India Economic Cooperation in the Indo-Pacific Era

Author:
Jeong Gon Kim, Kyunghoon Kim, Jonghun Pek, Yoo Jin Nam, and Wondeuk Cho
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
With the geopolitical and geoeconomic importance of the Indo-Pacific region in the spotlight, India's strategic value has come to the fore. The Korean government has included cooperation with India as a key task under its Indo-Pacific Strategy. This article aims to contribute to the establishment of economic cooperation with India from a medium- to long-term strategic perspective. Accordingly, this article analyzes the strategic changes of major countries towards India and India's response strategies, and the emerging agendas of economic cooperation between India and major countries. Lastly, this article proposes policy directions and key agendas for Korea-India economic cooperation.
Topic:
Economics, Bilateral Relations, Geopolitics, and Economic Cooperation
Political Geography:
India, Asia, South Korea, and Indo-Pacific

4. Japan’s Supply Chain Policy and its Implications for South Korea

Author:
Gyu-Pan Kim
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This WEB paper analyzed Japan's supply chain policy in line with the implementation of Japan's Economic Security Promotion Act in May 2022, and presented policy implications such as supply chain cooperation between Korea and Japan. First, this paper analyzed the US-led reorganization of the global supply chain and the Japanese government's response to it. In particular, the Japanese government's economic security policy was evaluated from the perspective of how Japan approaches the US-led the global supply chain reorganization. Second, the Japanese government's supply chain policy was analyzed, focusing on the supply chain policy for some critical materials under the Economic Security Promotion Act. Finally, this paper proposed ways for Korea and Japan to cooperate in reshaping the global supply chain led by the United States.
Topic:
Security, Economics, and Supply Chains
Political Geography:
Japan, Asia, South Korea, and United States of America

5. Korea’s Global Value Chain Strategies amid Rising Trade Disputes

Author:
Won Seok Choi
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This article explores the challenges and transformations in global economic governance, particularly in the context of China's rise, widening trade disputes, and the retreat of globalization. It discusses the reorganization of global supply chains and their implications for Korea, focusing on the policies of key countries like the United States, the European Union (EU), and China towards stabilizing and reorganizing supply chains, with an emphasis on transitioning to a green industrial structure and improving domestic industrial competitiveness, particularly in the semiconductor and secondary battery industries. Accordingly, this article analyzes Korea's dependency on imports for semiconductors and secondary batteries, noting significant increases in imports and the diversification of import sources. The analysis reveals Korea's high import dependence on specific countries for critical goods and materials, emphasizing the importance of supply chain cooperation with countries that have global export competitiveness.
Topic:
Economics, Globalization, Governance, Trade, Industry, and Value Chains
Political Geography:
Asia and South Korea

6. North Korea’s 2023 Trade with China: Analysis and Forecasts

Author:
Jangho Choi and Yoojeong Choi
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This article analyzes North Korea-China trade trends and statistics in 2023 to evaluate the extent of North Korea's trade normalization and its performance. North Korea's trade with China increased by more than 120% compared to the previous year as the country declared a COVID-19 Endemic and gradually eased border controls, but did not recover to 2018-19 levels, the year before the outbreak of COVID-19. Imports to China recorded 2.00 billion, 124.1% higher than the 0.89 billion in 2022. North Korea's imports from China in 2023 are estimated to be the maximum achievable given the lack of a full resumption of over-land trade. However, as the negative impact of UN sanctions on the North Korean economy is ongoing, making it difficult to normalize industrial production. North Korea mainly imported raw materials for processing trade (textile and garment raw materials), staple foods (rice and sugar), agricultural materials (fertilizer), and construction materials from China in 2023. North Korea’s exports to China stood at 0.29 billion, up 118.4% from 0.13 billion in 2023. Exports remain at the 16.9% of the level before the tightening of UN sanctions on North Korea, as the country has failed to diversify its products and expand exports of major export items. Exports were highly dependent on specific products, wigs and false eyelashes, a labor-intensive industry, accounting for 57.1% of total exports. In spite of increasing wigs export, North Korea failed to further expand its amount and diversify the export items in the second half of the year. According to the analysis of trade statistics, the main goals of North Korea's 2023 US foreign economic policy are: (1) resuming smuggling trade in textiles and clothing, (2) building irrigation canals in preparation for summer floods, (3) implementing state-led grain distribution, (4) building living houses in a rural area, and (5) increasing metal production for Russian arms exports. Despite the increase in imports from China in the transition to the coronavirus pandemic, it is difficult to say that it has yet led to the recovery of industrial production and economic development. The future of North Korea's trade with the rest of the world in 2024 will be determined by whether North Korea fully opens its borders and improves its relations with China. In 2024, both North Korea's exports and imports are expected to be slightly higher than in 2023. North Korea's exports are unlikely to increase significantly, as North Korea-Russia military cooperation is expected to continue and China is likely to maintain its checks on the growing Sino-Russian alignment. Increased imports will lead to a larger trade deficit, but it will be within North Korea's ability to manage for one to two years.
Topic:
Economics, Border Control, Trade, and COVID-19
Political Geography:
China, Asia, and North Korea

7. Armenia’s Critical Economic Reliance on Russia: Can the West Eliminate It?

Author:
Orkhan Baghirov
Publication Date:
01-2024
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
Lately one of the most discussed political issues related to the South Caucasus region is Armenia’s attempt to incline towards the West by trying to move away from Russia’s sphere of influence. This has been manifested both geopolitically and geoeconomically. However, Armenia’s potential strategic shift away from its centuries-old political alignment with Russia raises questions about the future of the overall relationship between the two countries. A key concern revolves around the challenges Armenia may face due to its significant economic dependence on Russia. For such a shift to occur successfully, Armenia would have to not only strengthen its political and security ties with the West, but also develop the ability to replace Russia with Western partners in key economic sectors. Thus, the primary objective of the essay is to assess the degree to which Armenia could economically substitute Russia with the West, determining the feasibility of this transition. To achieve this, we should identify the critical level of Armenia’s reliance on Russia across diverse economic sectors and assess the extent to which the West can mitigate this dependency in anything resembling a realistic timeframe, without, that is, critically endangering Armenia’s economic wellbeing.
Topic:
Economics, Geopolitics, Trade, and Regional Politics
Political Geography:
Russia, Armenia, and South Caucasus

8. Getting Off the Back Foot: Guiding Principles for a Proactive Western Strategy on Belarus

Author:
Artyom Shraibman
Publication Date:
04-2024
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
For decades, the West has been unable to build an effective strategy on Belarus due to the country’s limited geopolitical importance, an inexorably deeper dependence on Moscow, and the glaring absence of leverage over Minsk’s strategic decisionmaking. This paper proposes a different paradigm for approaching the issue. Instead of passively reacting to Minsk’s actions, the West should broaden its planning horizon and create more specific incentives for Belarus to follow a different trajectory in the future. The overriding goal of a more proactive Western strategy should be the eventual emergence of a democratic Belarus that is no longer fully dominated by Moscow in the military and political realms. Such an ambitious goal would have tangible and lasting benefits for the new European security landscape amid the prospect of a long war in Ukraine. Skepticism in Western policy circles about the viability of such a scenario is entirely understandable. Yet it is not entirely clear whether Western policymakers have registered the significant differences between Russia and Belarus at the societal level and divergent strategic interests of the Russian and Belarusian regimes. At the same time, it is essential for Western policymakers to keep their expectations in check and to avoid an overestimation of their capabilities. The Belarusian crisis cannot be resolved in the foreseeable future by Western efforts alone. Moreover, there should be no illusions about the fact that Belarus, much like Ukraine, holds a special place in the worldview of the Russian ruling elite and President Vladimir Putin personally. The Kremlin’s long-standing obsession with keeping the North Atlantic Treaty Organization (NATO) away from Russia’s borders plays into the same attachment to keeping the Belarusian regime in as tight an embrace as possible. Therefore, until Moscow either changes its foreign policy priorities under a new leadership or simply becomes unable to keep Minsk under its control, it would be naïve to expect that the Russian leadership will simply offer any Belarusian government greater leeway to shift its geopolitical orientation. At the same time, it is conceivable that a qualitative increase in military assistance to Ukraine and a more effective economic pressure campaign against Russia could disrupt Belarus’s trajectory and make Minsk more amenable to the incentives that the West can already offer. But an overnight breakthrough seems highly unlikely. This paper, therefore, focuses on more realistic recommendations with longer-term effects.
Topic:
Foreign Policy, Economics, Geopolitics, and Russia-Ukraine War
Political Geography:
Russia, Eastern Europe, and Belarus

9. Farmer Protests Across Europe

Author:
Nichita Gurcov, Nicola Audibert, and Cristian Vlas
Publication Date:
02-2024
Content Type:
Commentary and Analysis
Institution:
Armed Conflict Location & Event Data Project (ACLED)
Abstract:
Farmer demands for more economic protection and less regulation have led to a surge in protests across Europe in the past thre emonths, and especially in the past three weeks. It is the largest wave since the Dutch farmers' protests against their government's plan to cut nitrogen pollution in July 2022.
Topic:
Climate Change, Economics, Protests, Political Movements, and Farmers
Political Geography:
Europe

10. What works for working couples? Work arrangements, maternal labour supply, and the division of home production

Author:
Ludovica Ciasullo and Martina Uccioli
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:
We document how a change to work arrangements reduces the child penalty in labor supply for women, and that the consequent more equal distribution of household income does not translate into a more equal division of home production between mothers and fathers. The Australian 2009 Fair Work Act explicitly entitled parents of young children to request a (reasonable) change in work arrangements. Leveraging variation in the timing of the law, timing of childbirth, and the bite of the law across different occupations and industries, we establish three main results. First, the Fair Work Act was used by new mothers to reduce their weekly working hours without renouncing their permanent contract, hence maintaining a regular schedule. Second, with this work arrangement, working mothers’ child penalty declined from a 47 percent drop in hours worked to a 38 percent drop. Third, while this implies a significant shift towards equality in the female- and male-shares of household income, we do not observe any changes in the female (disproportionate) share of home production.
Topic:
Economics, Labor Issues, Women, Work, and Home Production
Political Geography:
United Kingdom and Europe

11. Sanctions have become a tool of first resort. But enforcement needs upgraded and updated resources.

Author:
David Mortlock and Alex Zerden
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Enforcement remains a critical but underresourced element of economic sanctions. The US Congress and the Department of the Treasury should consider updates to its resources, public guidance, and policies to ensure the efficacy of sanctions enforcement as the use of the sanctions policy tool continues to expand. Economic sanctions are often described as the foreign policy tool of first resort. The Department of the Treasury acknowledged this reality in its “2021 Sanctions Review.” Through its Office of Foreign Assets Control (OFAC), the Treasury Department administers thirty-eight different, albeit overlapping, economic sanctions programs. With only a few hundred employees, OFAC has a nearly unparalleled national security mandate with oversight of the US economy and many other facets of global economic activities. OFAC develops policies for the use of sanctions, designates sanctions targets like individuals, entities, and jurisdictions, engages with the private sector to promote compliance, and civilly enforces apparent violations by US persons and others. This latter enforcement role represents a critical but often overlooked capability. For instance, the same “2021 Sanctions Review” does not even mention the enforcement function in its assessment. (However, it did seek to ensure that sanctions are “enforceable” in the context of sanctions implementation.) Resource constraints, a lack of attention, and the prioritization of policy crises hamper this enforcement function. In 2023, OFAC only undertook seventeen public enforcement actions, including its largest settlement to date with Binance, a global cryptocurrency exchange. For perspective, the Department of Justice terminated 63,419 civil cases in fiscal year 2022, according to the most recent public data. As the wider interagency continues to rely on sanctions as a critical tool and the United States seeks to expand partner sanctions capacity, US policymakers must fully support the sanctions enforcement function. Strengthening the internal controls for OFAC enforcement improves the rule of law through improved due process and protects OFAC from legal challenges that could existentially undermine its national security mission. OFAC enforcement urgently requires increased budgetary resources and an upskilled workforce from Congress, stronger internal procedures to avoid litigation risks, improved public guidance, and revised enforcement guidelines to promote consistency and improve compliance by industry.
Topic:
Foreign Policy, Economics, Sanctions, Transparency, and Enforcement
Political Geography:
North America and United States of America

12. The EU Tobacco Tax Structure: Impact on Prices, Revenues, and Smoking Patterns

Author:
Oxford Economics
Publication Date:
05-2024
Content Type:
Special Report
Institution:
Oxford Economics
Abstract:
Multilateral organisations such as the World Bank and the IMF have made the argument that specific excise taxes for cigarette taxation can provide significant benefits over ad valorem excise taxes. Chief among the benefits they identify are: more stable and predictable government excise tax receipts; a lower administrative burden for tax management and collection; and internalising the externalities produced by cigarette consumption. Across the EU, Member States have been restructuring their excise tax systems to create an increasingly prominent role for specific excise taxes. Between 2010 and 2023, authorities in the EU opted to rebalance towards specific excise and away from ad valorem excise, with the average ad valorem rate across Member States falling from 36.7% to 27.0% of retail selling price (RSP). As a result, in this period the average specific excise burden across the EU increased from 30.9% to 44.5% of total taxation. However, this shift has not been uniform across Member States and the approach to cigarette taxation has diverged. Countries like Denmark and Sweden have moved to an almost total reliance on specific excise taxes. Meanwhile in some Member States such as Italy and Spain, the share of specific excise tax in total taxation has remained very low. In this study, we examine the experience of eight EU Member States that have all taken differing approaches to cigarette excise policy in recent years. In four countries that have rebalanced to achieve a higher proportional use of specific excise taxes since 2010, we found excise tax receipts to have remained stable or increased, despite flat or falling rates of legal consumption. In four countries that have not significantly rebalanced towards specific excise taxes, the results were more mixed. Italy and Spain, notably, have seen a decline in their cigarette excise tax receipts over the period, despite below-average declines in cigarette consumption. Ad valorem-based excise tax systems do not provide as strong an incentive for manufacturers to raise prices as a specific excise-based system would. In addition, ad valorem dominated excise tax systems can encourage downward substitution from consumers for cheaper alternatives, exacerbating the decline in excise tax receipts.
Topic:
Economics, European Union, Tax Systems, Tobacco, Price, and Revenue
Political Geography:
Europe

13. The Environmental Impact of Digital Over Cash Payments in Europe

Author:
Jan Sun, Hannah Zick, and Johanna Neuhoff
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Oxford Economics
Abstract:
On behalf of the European Digital Payment Industry Alliance (EDPIA), our report on “The Environmental Impact of Digital over Cash Payments in Europe” seeks to evaluate carbon emissions across payment systems at point of sales. Businesses and governments are becoming more and more focused on mitigating the effects of climate change through processes and policies, and the payment sector is no exception. As digital payments become more prevalent—with the number of non-cash payments doubling from 21% in 2016 to 41% in 2022 in the euro-area alone according to the European Central Bank—there has been a growing need to understand the environmental effects of these shifting preferences. Although some evidence indicates that digital payments have a smaller environmental footprint than cash payments, there has not been a comparative lifecycle assessment done between the two of them. In addition, given large differences across geographies, the actual impacts of payment methods at points of sales (POS) can differ widely from country to country. To examine this issue, this study utilises a Life-Cycle Assessment (LCA) following the International Organization for Standardization (ISO) guidelines. A method Oxford Economics has added to its toolkit, the LCA is a holistic approach that appraises environmental impacts across stages of a product lifecycle on a variety of categories. Which, in this case, includes a total of different 18 categories including for example, global warming potential, mineral resource scarcity, and ionizing radiation. This cradle-to-grave approach is used for three purposes: Firstly, to consider the separate processes of cash and non-cash payments in order to isolate the environmental “hotspots” and their respective impacts. Secondly, to understand the processes in three countries with different rates of payment adoption—Italy, Germany, and Finland—for comprehensive results. Thirdly, to compare the environmental impact of cash and non-cash payments at point of sales in the different impact categories.
Topic:
Climate Change, Economics, Carbon Emissions, Radiation, and Digital Payments
Political Geography:
Europe, Finland, Germany, and Italy

14. Decoding China’s Technology and Industrial Policy: Seven Terms You Need to Know

Author:
Barry Naughton, Siwen Xiao, and Yaosheng Xu
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
China’s technology and industrial policy programs have grown in scope and intensity since 2020, but the vocabulary used to describe them is vague and often misleading. This policy brief decodes seven essential terms and shows that they have concrete and complementary meanings. When understood in concert, they reveal the establishment of a large-scale, government-directed program of mission-oriented research, development, and application. Together these terms outline a substantial expansion of the Chinese government’s direct role in organizing economic activity, and hint at some of the limits of that expansion.
Topic:
Economics, Industrial Policy, Science and Technology, Research and Development, and Terminology
Political Geography:
China and Asia

15. The Sky Is Not the Limit. Geopolitics and Economics of the New Space Race

Author:
Alessandro Gili
Publication Date:
01-2024
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
Space is a contested domain for its very nature and today it is evidently becoming an increasingly important enabler of economic and military power. An increasing number of actors, infrastructures and technologies deployed in space also raises concerns for safety and security, especially in cyberspace. Many countries are striving to achieve space capabilities and autonomous access to space, and this is having a tremendous geopolitical impact, especially since space is emerging as an increasingly critical military and strategic domain. The development of the new space economy, which is increasingly involving the private sector and many industrial actors and services, will also be a game changer for the international economy. The space race likewise implies disruptive technologies that could contribute massively to the energy and digital transitions, accelerating solutions that could benefit humanity. A new international governance system for space is therefore needed urgently, considering that the current rules are no longer able to respond to a sector evolving at such a rapid pace. Which actors are leading the race? Which economic sectors could benefit the most and what could the new space economy mean for the world? How is space emerging as a military domain against a backdrop of increasing international tensions? What would a new system of global governance for space look like?
Topic:
Economics, Politics, Infrastructure, Geopolitics, Regulation, and Energy Security
Political Geography:
Russia, China, Europe, India, Italy, Global Focus, United States of America, and Space

16. Navigating the treacherous political economy of structural reform

Author:
Davide Furceri, Jonathan Ostry, and Chris Papageorgiou
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
We examine the economic and electoral effects of liberalisation measures using newly-constructed databases on structural economic reforms and the outcome of democratic elections since the 1970s. The data shows a remarkable slowdown in the pace of liberalisation in both advanced and emerging market and developing countries since the 1990s. A debate has emerged about the causes of this slowdown, including the possibility that reforms do not deliver the economic benefits that advocates, including the multilateral financial institutions, trumpeted. Some have pointed to the fact that the current and previous United States administrations have abandoned neoliberal policies in favour of more government intervention in the economy, and the effect has been globally contagious. Our empirical analysis suggests that the growth dividend from liberalisation is economically and statistically significant, but it emerges only slowly over time. Because of this delay, liberalising reforms are costly to democratic incumbents when they are implemented close to elections. Reforms may generate immediate concentrated losses, which elicit an electoral backlash, especially when the aggregate gains are only visible several years after the reform’s implementation. The electoral penalty is also sensitive to overall business-cycle conditions, being much larger when an economy is in recession. Electoral effects also differ depending on the type of reform. Notably, financial reforms generate more perceptible growth-equity trade-offs than real-economy reforms, especially when implemented during weak economic conditions. The political economy of reform is treacherous. To avoid adverse electoral effects, timing reform early in the electoral term and when business-cycle conditions are favourable is critical. So too is avoiding reforms that generate large distributional costs in the face of small aggregate gains (an adverse growth-equity trade-off). Focusing on these considerations is critical to reinvigorate support for structural reform.
Topic:
Economics, Political Economy, Reform, Elections, and Liberalization
Political Geography:
Global Focus

17. Who Governs? 50 years since the February 1974 election

Author:
Robert Saunders
Publication Date:
03-2024
Content Type:
Video
Institution:
Mile End Institute, Queen Mary University of London
Abstract:
50 years ago this month, Prime Minister Edward Heath called a general election. With severe economic problems including the quadrupling of oil prices, a particularly fierce miners’ strike and the introduction of a three-day week, Heath addressed the nation, telling the electorate that they had to choose between ‘a strong Government which has clear authority for the future to take decisions which will be needed’ and one that ‘abandons the struggle against rising prices under pressure from one particularly powerful group of workers’. The result was a monumental moment in British political history – the first hung parliament since 1929 – and, arguably, as Alan Bancroft suggests, consigned the ‘post-war settlement’ to the ‘intensive care unit, ultimately leading to its demise in 1979’. To mark this significant anniversary, the Edward Heath Academic Forum – a new academic network to encourage study of the politics of the 1970s, and Heath’s contribution to British, European, and global politics – held its first public event at Queen Mary University of London. Dr Robert Saunders as well as Lord Butler (Private Secretary to the Prime Minister, 1972-74) and Lord McNally (Political Advisor to James Callaghan, 1974-76, and Head of Political Office at 10 Downing Street, 1976-79) revisit the campaign, the Conservatives’ struggle to sustain the focus on ‘Who Governs?’, Heath’s efforts to form a coalition with the Liberals, and the eventual formation of a minority Labour government.
Topic:
Economics, Elections, Domestic Politics, Prime Minister, and Edward Heath
Political Geography:
United Kingdom and North America

18. Nobody wins unless everybody wins: The Coles review into the sustainment of Australia’s Collins-class submarines

Author:
Andrew Davies
Publication Date:
05-2024
Content Type:
Special Report
Institution:
Australian Strategic Policy Institute (ASPI)
Abstract:
In 2003, Australia became the proud owner of the last of six new-build Collins-class submarines. Less than a decade later, the fleet was in a poor state of repair, and at times only one or two of the boats were available to the Royal Australian Navy. This account by Andrew Davies explains how the situation was remediated by bringing in a team of highly experienced naval professionals to take an uncompromising look at the arrangements in place to manage a vital national defence asset. Despite a public perception that the submarines were inherently defective, the problems were in fact almost entirely due to dysfunctional and often rancorous organisational dynamics between the key players. In the space of just a few years, and with remarkably little required in the way of additional funding, the situation took a dramatic turn for the better. As with earlier ASPI case studies on defence projects, Nobody wins unless everybody wins is designed to help those in Defence, industry and parliament and other interested observers to better understand the complexities of the business, all with the aim of improving how Australia equips and sustains its defence force.
Topic:
Defense Policy, Economics, National Security, Armed Forces, Defense Industry, and Submarines
Political Geography:
Australia and Australia/Pacific

19. The cost of Defence: ASPI Defence budget brief 2024-2025

Author:
Bec Shrimpton
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Australian Strategic Policy Institute (ASPI)
Abstract:
Australia needs to spend more on defence—and it needs to do so immediately. The strategic imperative has been firmly established in the government’s own major defence documents. The Albanese government and the Coalition opposition agree that we are in the gravest geopolitical period in generations and this is only going to intensify. But as the Australian Strategic Policy Institute’s latest Cost of Defence report finds, the rhetorical urgency is not being matched by action in the form of defence investment. The May budget is the latest demonstration of this mismatch, lacking spending for swift increases in capabilities that the Australian Defence Force would need if our region were to deteriorate quickly. In particular, this year’s budget priorities are not directed towards strengthening the Australian Defence Force’s ability to fight in the next decade. This is not doom-mongering; the government has acknowledged that the warning time before any conflict, which had long been set at 10 years, has shrunk to effectively zero time. We have war in Ukraine and the Middle East, aggression and increasingly dangerous and unprofessional behaviour from China causing instability and confrontation in the South China Sea and across the Taiwan Strait, erosions of the rule of law and revisionist agendas from authoritarians. Instability is heightened by foreign interference, economic coercion and artificial intelligence-enabled dangers such as cyber attacks and disinformation. If war were to break out at any time in the next 10 years, our military would essentially fight with the force it has today. Based on current resourcing, nothing significant will change over the decade. Most of the major new capabilities in the government’s defence investment blueprint are two decades away from being fully fielded. That blueprint does contain some shorter-term enhancements, but these will not be fielded until the 2030s. The welcome $5.7 billion in new defence spending over the four-year forward estimates period is devoted to just three priorities: the AUKUS submarines, the next fleet of surface warships and investment in long-range strike, targeting and autonomous systems. But two thirds of this funding doesn’t arrive until 2027-28. The relatively impressive longer term plan leaves us vulnerable in the immediate period ahead. More money immediately is not a silver bullet, and ambition must be balanced with how much Defence can actually spend each year. But the nation’s security requires a two-pronged strategy of enhancing our existing force to meet threats within the decade while investing in long term capabilities. Other countries are furiously pursuing new capabilities that can be put into action quickly—such as creating masses of small drones and prototyping and developing new technologies. We talk about technology and asymmetric advantage—playing to your strengths and finding effective means to exploit an opponent’s weaknesses–yet we lack a credible pathway to bring them into operation to bolster the force we have today. Over the longer term, the picture starts gradually to improve. The $50 billion in additional spending over the next decade is an important commitment, even if far away. The plan for a complete recapitalisation of the surface combatant fleet will eventually give us the biggest and most capable navy Australia has had since World War Two. But, so far, we are failing to grasp the opportunity to link our traditional large platforms such as submarines and warships to more modern developments in warfare—drones and various small uncrewed and smart capabilities. AI, robotics, electronic warfare and space capabilities remain aspirational, without any pathway for inclusion and integration into a truly focused force capable of meaningful deterrence and warfighting. That is why it is so important to realise AUKUS Pillar II, which is dealing with these capabilities. It’s easy to criticise; harder to do. All governments are grappling with tight budgets amid competing demands and the unremitting expectations of voters and taxpayers. As a nation, we need to accept the need for higher defence spending. Hoping that conflict won’t come is not a viable strategy. If we are prepared for war, we have a better chance of deterring and hence averting it. Europe is living that lesson now, having put all hope in the judgment that global trade and economic entanglement would bring security. Now it is clear that military investment is imperative to deter war or best prepare nations for it. The government has a vital responsibility to speak plainly to the nation about the geopolitical risks and the possibility of conflict. We need to grasp the challenge that is in front of us today, not in three or five years’ time. Otherwise, we risk delivering on Macarthur’s famous two word warning: “The history of failure in war can almost always be summed up in two words: “Too late.” Too late in comprehending the deadly enemy. Too late in realizing the mortal danger. Too late in preparedness. Too late in uniting all possible forces for resistance.” Why take the risk of only acting after a crisis and saying better late than never? The world in turmoil demands we act in real time to both deter crises and be best prepared for them.
Topic:
Defense Policy, Economics, National Security, Armed Forces, Budget, and Defense Industry
Political Geography:
Australia and Australia/Pacific

20. A Subdued Environment and Missed Opportunities

Author:
Scott Snyder and See-Won Byun
Publication Date:
01-2024
Content Type:
Journal Article
Journal:
Comparative Connections
Institution:
Pacific Forum
Abstract:
Chinese diplomacy toward the Korean Peninsula in late 2023 sputtered forward, driven more by a calendar of bilateral anniversaries with North Korea and multilateral gatherings involving South Korea than any sense of strategic purpose. Both relationships seemed preoccupied with off-stage developments such as the September summit between Kim Jong Un and Vladimir Putin and the momentum of US-Japan-South Korea trilateral relations, rather than any inherent dynamism of their own. Still, regular Sino-North Korean bilateral exchanges ahead of the 75th anniversary of the bilateral relationship and Sino-South Korean bilateral economic dialogues provide opportunities to overcome resistance and sustain progress in the face of deepening major power rivalries. Senior-level dialogues between China and North Korea occurred on North Korea’s 75th founding anniversary in September, with the visit of Chinese Vice Premier Liu Guozhong to Pyongyang, a visit that occurred against the backdrop of the second US-South Korea Nuclear Consultative Group meeting, North Korea’s first successful indigenous satellite launch, and North Korean Vice Foreign Minister Pak Myong Ho’s visit to Beijing. Meanwhile, ministerial and working-level economic dialogues on issues such as supply-chain stability, export controls, and trade facilitation continued between China and South Korea, punctuated by a notable bilateral exchange between Chinese President Xi Jinping and South Korean Prime Minister Han Duck-soo in late September on the 19th Asian Games in Hangzhou. But these exchanges did not generate the traction necessary for South Korean President Yoon Suk Yeol to have substantive bilateral meetings with President Xi on the sidelines of the APEC meeting in San Francisco in November. Bilateral and trilateral foreign ministerial meetings in Busan between South Korean Foreign Minister Park Jin and counterparts Wang Yi and Kamikawa Yoko—the first in four years—failed to generate sufficient momentum to set a date for the resumption of China-Japan-South Korea summitry. Instead, the resumption of China-South Korea or China-Japan-South Korea summitry will depend on developments in 2024.
Topic:
International Relations, Foreign Policy, Diplomacy, Economics, Dialogue, and Regional Security
Political Geography:
China, South Korea, and North Korea